LOGICAL AND LOGISTICAL SOLUTIONS
|Gas prices are rising and warehouse technologies are changing, so where are the best places to locate a large corporate distribution network? Saddle Creek's Michael DelBovo told attendees at yesterday's Inland Ports Conference that real estate costs average just 4.3% of a company's overall output. This means selection needs to be based less on the real estate mantra of “location, location, location” and more on transportation, inventory, and incentives. Jones Lang LaSalle's Rich Thompson agreed, saying there needs to be a comprehensive approach. He advises industrial users and brokers to interact with municipal economic development partners to encourage incentives for industrial jobs, which are often higher than minimum wage.
CBRE's Bill Frain says a lot of his clients are looking at smaller warehouses, each closer to the customer, to reduce the cost of the last mile of the trip. Grubb & Ellis's Tim Feemster told the audience one of his clients was trying to go from two to 11 or more distribution centers across the country to reduce shipping costs, although such a move would mean a huge increase in inventory. He said because of leases already in place, 1M SF warehouses won't become obsolete any time soon, especially in major markets like Chicago, Atlanta and LA. (Plus we'd argue giant warehouses are always necessary for movie chase scenes and episodes of Scooby Doo.)